On 5 May 2023, a draft law No. 8207 on the transparency of online payments (the “Draft Law”) has been submitted to the Luxembourg Parliament (Chambre des Députés). The purpose of the Law is to introduce a new electronic system to fight against VAT fraud.
The Law transposes Directive (EU) 2020/284 of 18 February 2020 (the “Directive”) amending Directive 2006/112/EC as regards the introduction of certain requirements for payment service providers by amending the Luxembourg VAT Law of 12 February 1979.
The Draft Law aims to set up a central electronic system called Central Electronic System of Payment Information (“CESOP”) to prevent VAT fraud in e-commerce within the European cross-border market. The general idea behind the introduction of the CESOP is that, each time a customer established in the EU makes an online purchase via a payment service provider, the CESOP is used to collect information relating to consumer payments. The data collected is used to facilitate checks of supplies of goods and services subject to VAT in the EU.
The Draft Law introduces the obligation for payment service providers established in Luxembourg or providing payment services in Luxembourg to keep a detailed register, in an electronic form, of all payments and the related beneficiaries, carried out in the context of the services provided by it. The obligation applies to payment service providers through which at least 25 cross-border payments to the same beneficiary have been carried out.
The information to be recorded by the payment service provider in its electronic register includes notably the identification of the payment service provider and the beneficiary (including, if available, the VAT identification number or any other national tax identification number of the beneficiary), the date and time of the payment or reimbursement, the amount and currency of the payment or reimbursement of the payment, as well as the Member State of origin of the payment received by the beneficiary. It needs to be communicated, on a quarterly basis, to the Luxembourg Registration Duties, Estates and VAT Authority (Administration de l’enregistrement, des domaines et de la TVA) (“AEDT”), via the use of an electronic form. The AEDT will in turn feed the data collected into the CESOP, through which an exchange of information with other EU Member States will take place.
The Draft Law also introduces the possibility of administrative fines, that may be imposed by the Director of the AEDT after an unsuccessful prior warning.
The provisions of the Draft Law are meant to apply as of 1 January 2024.